Bonds (Financial)
Bonds are a financial instrument used to raise money by governments, organisations and companies. Bonds are purchased from the bond issuer for a set price. The bond itself is a notice of debt and certifies that the issuer will repay the debt on a set date; this date is referred to as the "maturity" date of the bond. The issuer may pay regular interest to the bond-holder or make a lump-sum interest payment along with repayment of the bond value upon redemption of the bond. Bonds cannot be redeemed prior to their maturity date but can be freely transferred between individuals and organisation, make them a more liquid financial asset than convetional loans. The majority of bonds in the Known World are a type of bond known as a Sovereign Bond. Some banks also issue a type of bond known as an Speculative-Investment Banking Bond (a "SIBBond"). Types of Bond Sovereign Bonds Sovereign Bonds are issued by sovereign states, usually through a governmen or government agency, such as a central bank or government treasury. These bonds are used by governments to fund. They are promoted and issued by states most heavily when the state lacks other forms of funding and/or is experiencing issues with government cash-flow. They are seen as a safe form of investment with reliable yields, as their value is guaranteed by the issuing state itself and therefore there is little risk of a default on the value of the bond. Speculative-Investment Banking Bonds Speculative-Investment Banking Bonds, known more commonly as SIBBonds, are issued by organisations who take part in private investment and speculative investment. These bonds are typically issed to fund large-scale projects, where the ordinary financial capital of an organisation is noty sufficient to cover its desired investment. They are one way for individuals to gain investment benefits from large-scale, specialised investments that would otherwise be inaccessible for them as an investor. These bonds are generally more lucractive than sovereign bonds as they are generally invested in assets that yield a higher rate of return on investment. Conversely, the investments to which these bonds are tied are riskier than government-lead investment, particularly as the issuing organisations face a higher risk of financial collapse or degredation. Many SIBBons contain caveats that may lead to a reduced return or lower interest rates should the issuing organisation's investment underperform. To countract this, some bonds may offer incentives such as interest or maturity bonuses to investments that over-perform. History of Bonds Sovereign Bonds, in the modern sense, were first used by the Commonwealth of Pem immediately following the civil war. Much of the nation's bullion had been stored at Rubellium and, in particular Coltar, both of which had seceded. Pem also lacked an immediate stock of raw materials, its economy having been badly damaged by the First Tall Kingdom War and further disrupted by the Civil War. As a result, it desperately needed some form of funding that would allow it to maintain its fledgling government. Sir Angelus Whitchord devised the idea of issuing government debt for a set amount of time in order to finance the rebuilding of the economy and thus avoid complete economic collapse. Whitchord put forward the Sovereign Finance Bill, advocating and authorising the use of Sovereign Bonds to finance rebuilding the economy; the bill passed by a narrow majority. -move to dedicated page- Richard Pell and his militaristic government clique pushed for the issuing of bonds to Coltar, in the hope that they could invade the city-state at a later date and wipe the nation's debt, but the idea was rejected by the Lord Protector. Ultimately, the bonds were primarily issued to Raqqos and Aleuria, neutral parties in the recent war. In 396BGE Aleuria was issued with mostly 30-year bonds, with Raqqos accepting 50-year bonds in 395BGE on the proviso that they be granted specific trade rights. The issuing of these bonds is considered by modern historians and economist as a financially prude move for the time. However, the repayment of bond-debt to Aleuria placed Pem in a weak financial position for the Great Spice Crash in 359BGE, which seven years later. Pem was also forced to renegotiate bond-maturity dates with Raqqos as it was unable to repay the bonds in 346BGE. -end- Following the economic collapse in 359BGE, speculative-investment became an economic-taboo across the Centrelands. It would not be until some decades later that people begun to partake. Following the Second Tall Kingdom War, Pem effectively, albeit legimitely, stripped the former Great Kingdom of its bullion through imposed and/or co-erced bonds issued by the Commonwealth to prop up their economy. Recently, a large number of SIBBons were issued by Merchant & Millners to fund their investment in the RAILWAY.